Lyft lifted by $1bn investment led by Google subsidiary

Ride-hailing service Lyft has raised $1 billion in a funding round led by Google investment firm CapitalG. The Uber rival is now worth $11bn, giving it more spending power as it expands its presence around the world. Uber has recently faced some setbacks.

The new investment leaves Lyft still a long way behind Uber. Its $11 billion post-funding valuation pales next to Uber's $68.5 billion. Uber has encountered several operational issues this year though, including the loss of its London license and tighter restrictions in other areas.

Lyft's trying to leverage Uber's weaknesses to play catch-up in the ride-hailing market. The company is gaining market share and hasn’t struggled from the same problems that have plagued Uber. Internal disruptions and public court cases have drained Uber's resources, leaving it unable to innovate and expand its service.

In the meantime, Lyft is proving its worth and expanding its business across the U.S. The company claims its service is now available to 95 percent of the population, an increase from 54 percent at the start of the year. Although Lyft hasn't said what it'll spend the new money on, consolidation of its network and international expansion are the two obvious focus areas.

The Financial Times reports establishing an overseas presence is Lyft's next big aim. It's looking to Mexico City, Toronto and London as the first targets for its international service. The latter location could give the company a particularly significant boost if Uber's appeal to recover its operating license gets rejected.

CapitalG is owned by Google parent company Alphabet. Alphabet's already engaging in significant joint research with Lyft. Its autonomous vehicles business Waymo is collaborating with Lyft to build self-driving cars, pursuing the eventual aim of offering robo-taxis through the Lyft app.

This partnership has developed alongside a court case between Google and Uber over allegations of trade secrets theft relating to autonomous technology. Uber has denied Google's claims, creating pronounced tensions between the two.

Google had been an early investor in Uber but is now focusing on closer collaboration with Lyft. Alphabet's decision to fund Lyft's business makes it more probable the company will emerge as a leading ride-hailing provider, ending any chance of improved relations between itself and Uber. This could lead to a more established market for consumers, creating two established ride-hailing services and more effective competition.